Jerash Holdings reported fiscal 2026 second‑quarter revenue of $42.0 million, up 4.3 % from $40.2 million a year earlier. The increase was driven by higher shipment volumes to U.S. customers and a broader customer base, as the company’s capacity expansion added roughly 15 % to production capability. The revenue beat of $0.18 million over the consensus estimate of $41.82 million reflects sustained demand for the firm’s custom ready‑made sportswear and outerwear, but the growth is modest compared with the 17.5 % gross‑margin expansion seen in the prior year’s quarter.
Gross margin contracted to 15.0 % from 17.5 % a year earlier, a compression of 2.5 percentage points. Management attributed the decline to a shift in product mix toward lower‑margin outerwear and the end of a “catch‑up” period that had previously boosted higher‑margin items. The broader customer diversification also lowered the average margin, as new contracts tend to carry tighter pricing terms. The margin squeeze explains why operating income fell to $1.09 million from $1.13 million in the same quarter last year, despite the revenue increase.
Net income for the quarter was $803,000, a turnaround from the $665,000 loss reported in fiscal 2025 Q2. However, earnings per share of $0.04 missed the consensus estimate of $0.0969 by $0.0569, a miss of 58 %. The EPS shortfall is largely due to the margin compression and the higher cost of goods sold that offset the revenue growth. The company’s diluted earnings per share fell from $0.05 in the prior year’s quarter, underscoring the pressure on profitability.
For the third quarter, Jerash guided revenue growth of 19 % to 21 % year‑over‑year and a gross‑margin target of 13 % to 15 %. The guidance signals management’s confidence in continued demand but also acknowledges that margin pressure will persist as the company balances new customer contracts with cost control. The guidance is consistent with the company’s recent facility expansion and its plan to explore acquisitions to strengthen its product mix.
CEO Sam Choi highlighted the completion of the capacity expansion and the initiation of a long‑term growth plan, noting that “Jordan is increasingly becoming a preferred destination for global brands seeking to diversify manufacturing partnerships beyond Asia.” CFO Gilbert Kwong‑Yiu Lee added that the revenue increase was driven by higher shipment volumes to U.S. customers and a more diversified customer base, while the gross‑margin decline was “mainly due to customer and product diversification.” The company also declared a quarterly dividend of $0.05 per share, payable on November 26.
Investor sentiment was dampened by the EPS miss and margin compression. Market participants focused on the earnings shortfall and the continued pressure on profitability, which outweighed the modest revenue beat and capacity‑expansion progress. The negative reaction reflects concerns that the company’s growth strategy may not translate into sustainable profitability in the near term.
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